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Mukden was lost. The Nationalist withdrawal had turned into a rout. As Communist troops took over the government's main Manchurian stronghold last week, Nanking received the radio message: "No more reports. Cannot get out of office. Goodbye." Nationalist planes began to bomb the city.

The decision to pull out of Mukden came during an emergency conference called by Generalissimo Chiang Kai-shek with his top generals in Peiping. The meeting was followed by the government's recapture of Yingkow, opening a seaport and a narrow, 100-mile corridor from the Mukden pocket (TIME, Oct. 25).

Unfortunately, a full-scale Manchurian Dunkirk from Yingkow was no longer possible. The success of the operation depended on the ability of General Liao Yao-hsiang to keep open the escape corridor with twelve divisions, to allow the remaining seven Nationalist divisions to embark. Last week, the Communist radio announced that Liao's whole demoralized force had been wiped out. Significantly, it added that the disaster had occurred "on the eve of the U.S. elections."

Ghost City. TIME & LIFE Correspondent Roy Rowan cabled this description of Mukden's last days: "Mukden is a ghost city. Freezing blasts of wind whistled down its broad, empty thoroughfares. Shop fronts and some of the pillboxes at main intersections were boarded up. Jagged walls in the sprawling Japanese factory areas, blasted by U.S. bombers during the war and later pillaged by Russian occupation forces in 1946, stood silhouetted against a steel-grey sky. Mukden, center of one of the world's potentially richest agricultural and industrial areas, looked as cold and desolate as the ragged half-frozen refugees picking their way through the debris on every street.

"Most of the city's activities centered around the railway station and airports. Streets by the depot were jammed with refugees peddling odd bits of belongings to buy food at the steaming vendors' stands lining the sidewalks. Every few hours, trains overflowing with yellow-clad troops chuffed from Mukden station and rattled west toward Yingkow.

"At the Southern airport thousands of civilians, waiting their turn to board a plane, swarmed over the frozen field. At night they huddled together in a drafty, bomb-blasted hangar. In the day they stood in the wan sunlight shaking the chill from their limbs as C-46s droned in monotonously from dawn till dusk. As Communist troops drew nearer and nearer, the panicky ticket holders began to riot. After Claire Chennault's Civil Air Transport made its last flight out of Mukden, those who could set out in automobiles and mule carts to run the Communist gauntlet to Yingkow."

Coming at China's darkest hour, the fall of Mukden, after the government's stubborn attempt to stay in Manchuria, gravely affected public confidence in the regime. Economic pressure forced the government at week's end to give up its price-control program as a failure, unfreeze price and wage ceilings. Overnight Shanghai prices increased four to five times. The new gold yuan (TIME, Aug. 30) had started on the same giddy spiral as the old Chinese national dollar.

The military implications of the Manchurian disaster were also serious. After mopping up around Mukden, handsome Communist Commander General Lin Piao, once Chiang Kai-shek's star student at the Whampoa Military Academy, will be able to mass some 250,000 Red troops for a southward thrust at Peiping and General Fu Tso-yi's North China corridor. Unless Fu can get substantial reinforcements, the fall of North China will be merely a question of Communist convenience.

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